Feixiaohao, a prominent Chinese cryptocurrency market data provider, is currently under investigation by the Inner Mongolia police. The investigation has been ongoing for over six months and has led to the arrest of several key company executives. While the exact reasons behind the investigation are undisclosed, it is speculated that it may involve compliance issues or disputes related to the platform’s business practices. Feixiaohao, often compared to CoinGecko, was established in 2017 and quickly became the largest simplified Chinese crypto market data website, offering data on over 14,000 cryptocurrencies. However, reports suggest that the platform may be under investigation for promoting dubious exchanges and scam tokens, which has been a persistent issue within the broader crypto market.
In 2021, Feixiaohao came under scrutiny for advertising the Squid Game token, a cryptocurrency inspired by the Netflix series that turned out to be a scam. The recent investigation by the Inner Mongolia police has raised concerns about the platform’s operations and compliance with Chinese laws. Multiple sources indicate that many of Feixiaohao’s exchange partners have been unable to contact the company, adding to the uncertainty surrounding its future. Despite these legal troubles, Feixiaohao continues to operate and update its website, with the most recent articles dated August 30, 2024. There are reports suggesting that the current team running Feixiaohao may not be the original group but a new entity that acquired access to its codebase and is attempting to continue operations under the same brand.
The investigation into Feixiaohao comes at a time when China has been tightening its regulatory grip on the cryptocurrency sector. Since the People’s Bank of China imposed a ban on cryptocurrency transactions in September 2021, the regulatory environment for crypto-related businesses has become increasingly hostile. Despite this, Feixiaohao has managed to sustain a significant user base, with approximately 200,000 monthly visits as of July 2024. There is continued demand for cryptocurrency information and data within China, despite official efforts to curb digital asset activities. The investigative scrutiny on Feixiaohao reflects the broader challenges facing the crypto industry in China, where authorities have been ramping up enforcement actions against illegal activities associated with digital assets.
In 2023, over 42,000 individuals were prosecuted in China for involvement in fraudulent cryptocurrency activities, indicating the extent of crypto-related crimes in the country. Despite enforcement efforts, illegal operations in the crypto space persist. Earlier this year, Industrial Bank, a major Chinese bank, announced initiatives to incentivize digital yuan adoption by offering carbon points to customers who use the central bank digital currency (CBDC) for retail payments, fund purchases, and credit card payments via its app. Customers can earn carbon points for eco-friendly actions, which can be redeemed for travel card credits and shopping vouchers. Since the digital yuan’s introduction in 2020, Industrial Bank has opened nearly 7.3 million digital wallets for its customers, processing over $41 billion in transactions.
The challenges faced by Feixiaohao and the broader crypto industry in China highlight the complexities of operating in a heavily regulated environment. The ongoing investigations and legal troubles underscore the need for crypto businesses to navigate the regulatory landscape carefully and ensure compliance with laws and regulations. The demand for cryptocurrency information and services in China remains high, despite regulatory challenges, indicating the resilience and growth potential of the sector in the country. As authorities continue to crack down on illegal activities in the crypto space, businesses will need to adapt and innovate to stay compliant and address evolving regulatory requirements.
